Elektron PLC reports record profits.

Elektron PLC has now reported record profits for year end 31st Jan 2007.

Highlights:-

Sales increased 16% to £26 million sterling.

Pre tax profit before exceptional items £1,874,000 (£1,791,000)

Eps before exceptional items 1.73p (1.65p)

Cash generated from operations £2,095,000

Dividend rises 14% to 0.4p.

Annualised sales from continuing operations of circa £30 million, treble that of four years ago.

Elektron PLC reported record pre exceptional profits yet again for year end Jan 2007.

The only cautious element in the RNS was Arcolectric sales and margins seemed to have been affected by sterling now at record highs. However the company indicated they were addressing those issues and hope to be manufacturing higher margin products to counter sterling at its all time highs and the impact of high cost of raw materials. It has to be said Arcolectric is UK based and the Bulgin business which has bow been transfered to Tunisia is not now affected by strength of sterling.

Bulgin sales are still strong at and they appear to be doing well in the US. More information can be seen from an earlier blog on the US. The cost savings of approx £900,000 have yet to feed fully through as the company only exitted the Barking factory in March 2007.

The HOH acquisition appears to have been bought on the cheap now as they made £168,000 operating profit before losses of £80,000 incurred at NPE and Richard Loyd for the 3 months under EKT control i.e Nov, Dec, Jan. NPE has now been disposed of and the NPE freehold factory is in negotiations for sale. So is the business of Richard Loyd. According to EKT management sales are rising and they see better things ahead. Following the sale and lease back core debt has been considerably reduced to approx £2 million. The sale of NPE business and the freehold factory will reduce this further. It would seem reasonable to estimate operating profits from the HOH acquisition going forward £500,000 to £750,000 before interest. EKT only paid £3 million for the HOH business the return on capital is approx 20%.

The final dividend rises 14% to 0.40p and the company indicate that the rise in dividend is indicative of confidence in the business. x dividend is on the 8th August and the divi is payable on the 7th Sept 2007. It looks like on past performance EKT will continue a double digit rise in dividends going forward.

It would appear Elektron are still on the acquisition trail and the CE Adrian Girling hopes to grow Elektron to a £100 million turnover business in the medium term.

The company have also indicated they are looking to buy back shares subject to funds not needed elsewhere that said as the buy backs have not re commenced it would appear the company may have their eyes on another acquisition.

In the last 5 years net assets per share have risen at a rapid rate and it seems this could continue:-

Year end 31st Jan 2003 net assets 0.96million net asset value per share 0.63p

Year end 31st Jan 2004 net assets 3.34million net asset value per share 5.30p

Year end 31st Jan 2005 net assets 5.45million net asset value per share 6.29p

Year end 31st Jan 2006 net assets 6.57million net asset value per share 7.57p

Year end 31st Jan 2007 net assets 8 million ...net asset value per share 9.23p

All in all new EKT management have proved they can turn businesses round and provide value for shareholders. There should be some rich rewards for investors holding for the long term.